Posts Tagged ‘offgrid’

The hidden digital divide: Energy consumption and infrastructure

Photocredit: Niti Bhan, Maua, Kenya Feb 2012

This is an ironbox. It is heated by placing glowing embers of charcoal inside and securing the lid. When hot, it is used to iron clothes. Variations of this design can be seen in use across India’s urban centers where the isteriwallah plies his trade, ironing clothes for a few paise a piece or available for sale in shops in Iloilo City, The Phillipines. The concept remains the same.

This ironbox caught my eye in the North Meru town of Maua in Kenya. It was available for sale at an electrical and electronics store which otherwise displayed colour television sets, home stereo systems and more. Why would a charcoal powered primitive device like this be sold in a modern store like that?

For one, the most common source of electricity to power the home are solar systems and the energy source is far too weak to run a regular iron. And if there’s electricity, then power consuming appliances like irons and immersion water heaters are avoided to save money on the bill.

I’ve covered this aspect of gaps in the infrastructure before but as a driver for innovation. Today, this scarcity acts as a barrier to growth for high tech innovation, an aspect better captured by this interview with a Ghanaian startup founder:

What are some of the challenges you face running a startup in Africa?

  1. Inadequate infrastructural base. For software startups, internet connectivity is inadequate compared to the U.S. This means entrepreneurs have to spend more time doing research and software programming. Even where there is internet, it’s expensive and comes with low bandwidth.
  2. Shortage in energy supply. Startups that can’t afford standby energy generators lose productive hours anytime there is power outage (which is consistent in most countries in Africa).
  3. Low capital investment. Bootstrapping in Africa is not easy and angel investor funding is non-existent. There are a few venture funds but they aren’t adequate enough to meet the demand of startups. In addition, the terms are not favorable for most startups who want to access these funds. Worst of all, financial institutions like the banks charge high interest rates for loans making it difficult for startups to have financial stability.

When something so basic as to be taken for granted by startup founders most everywhere else in the world is considered a challenging barrier for African entreprenuers, it may as well be a digital chasm.

What does it mean when Chinese manufacturers enter the social enterprise space?

“The market has been destroyed for solar” or so I heard today from someone who prefers to stay anonymous but I’d hazard a guess knows a fair bit about what is happening on the ground in East Africa from the point of view of social enterprises.

Interestingly, I’d brought up the question of whether “It was time to move on from the label “the BoP””, something I’ve been pondering over for quite some months now. And that was when the conversation had turned to the popular products for low income customers – improved cookstoves, solar lighting, agricultural equipment like water pumps and the like.

This will not be the definitive post or article on the topic – consider this an appetizer or rather, the beginning of the pondering on the weak signals seen in the market and what they might imply for social enterprises and their ilk, but also the larger “BoP” marketplace as a whole.

You see, what I’ve seen now in the market are branded China made products in categories that were only recently created by BoP focused social entrepreneurs and designers. The Chinese manufacturer has no other bottomline but that which makes a profit on a product for which they perceive a high volume demand. And witness the rise of the Tecnos and the Birds even as the category creator and erstwhile market leader Nokia battles for continued dominance in developing markets.

What does it mean when a Chinese brand enters what hitherto were considered “social impact” product categories? Are social entrepreneurs – many of whom are still supported through grants and funds, as they seek to improve the lives of the poor – prepared for an increasing competitive environment? Not just from other international social enterprises either but from purely commercial solutions?

What we also realized in today’s conversation was that it was the BoP focused social enterprises who were doing all the heavy lifting of market creation – experimenting with value propositions and product and services that people would want, creating awareness and demand while investing their time, effort and resources in ensuring the best outcome for all stakeholders. As was pointed out to me, it was the social enterprises who tended to ensure that they offered high quality, well designed, durable and reliable products to the ‘poor’, something that the competition is not known to do.

And so, it brought us to the sentence that started this post – “the market has been destroyed”. While its just one category at the moment, how soon before its all the others as the increasing purchasing power and aspirations of the informal economy seek the best bang for their rupee, kwacha or shilling?